Abstract: The present invention provides a method and system that enables software-on-demand and software subscription services based on a dynamic transformation filter technology. The invention is also useful in the distribution of other electronic material. The apparatus utilized in this invention does not create any intermediate storage of decrypted material that is under the protection of this technology. Instead, the apparatus is implemented as a virtually integral part of the operating system that monitors and "filters" all read, write, and open/execute access to and from the I/O devices, such as a hard drive. As the protected material is being accessed for read, write or open/execute, the transformation filter positions itself in the critical path which is required for loading the material through the low level file system layer to the high level application layer. The material enters the transformation filter in its encrypted state.